Article - Good Credit Management - Tips & Advice About Collecting Unpaid Sales Invoices

Always confirm the exact trading name of the customer e.g. XYZ Limited; XYZ Plc; Mr X and Mr Y trading as XYZ; or Mr X trading as XYZ.  All of these are uniquely different and knowing the exact trading name can be vital in pursing a customer for payment through the legal system, should the need arise.  The customer's headed stationery, business cards or brochures can often be helpful in determining the exact name, although remember they can be incorrect.
 

Offer the minimum credit period that will be competitively acceptable.  The longer the credit period the more chance there is that the customer's financial circumstances may change.
 

Make sure that you have all the customer's contact details: addresses, phone numbers, fax numbers, mobile numbers, email addresses etc.  If possible, take the contact details of the prime movers.  These can be extremely helpful if you need to contact the customer regarding unpaid invoices in the future.
 

Trade references can be helpful but most businesses will have at least a couple of customers that will speak well of them.
 

Credit information about customers can be purchased from a variety of providers.  This can give you insight into the financial position of a business.  You can also ask the customer to provide you with financial information about their business.
 

If a considerable amount of credit will be at stake consider visiting the customer to confirm that the address given exists.  A great deal of information about a business can often be gained just by visiting their offices and noticing what is going on e.g. are they busy or is trade slack?
 

Ensure that the customer has seen your terms of trade and has accepted the credit terms that you have agreed to offer.
 

Make sure you understand the process for submitting your invoices and receiving payment from the customer e.g. who do you send them to, when is their cheque run etc.

Understand the customer's payment process and procedures e.g. if you know the date that they undertake their monthly cheque run you can time your statement accordingly.
 

Consider "pre-dunning", calling the customer before payment is due to confirm that your invoice has been received and that there are no reasons for non payment.
 

Establish a systematic approach to issuing statements, sending chasing letters (which gradually become firmer) and calling the customers.
 

Keep copies of any correspondence and notes about telephone conversations.  Confirm conversations in writing and if possible gain the customer's written agreement to any payment promises.
 

Try to call back and speak to the individuals concerned rather than leaving messages on answer machines.
 

Consider other methods of contacting debtors e.g. text messages to mobile numbers or email and fax.
 

Always remain calm but assertive on the telephone.
 

Follow up promptly on any broken promises of payment.
 

Shorten the process by emailing or faxing documents rather than posting.
 

If necessary consider stopping further deliveries once invoices are overdue.